Sir Christopher Kelly: 'The parties said they would act but nothing is happening'

Sleaze-buster Sir Christopher Kelly fears his plan to clean up politics is running out of time

Sir Christopher Kelly has an unhappy anniversary coming up. Not completing five years as head of the anti-sleaze watchdog next month. But this Thursday, it will be a year since his Committee on Standards in Public Life produced a plan to clean up British politics once and for all by taking "big money" out of it through a £10,000 cap on individual donations to parties.

Officially, the Conservatives, Labour and the Liberal Democrats are still holding talks about the proposals. But it is an open secret that their negotiations have run into the sand. Admitting he was "sad" about the parties' response, Sir Christopher told The Independent: "If you want to take the big money out of politics, you can't have big donations, and that means a cap on donations. There is no other way."

He said: "The three main political parties committed themselves to doing something about it in their manifestos, as did the Coalition Agreement. And yet nothing is happening. But if they are going to reclaim any ground on public trust and confidence, then surely they have got to be proactive in dealing with difficult issues like this."

With the parties already eyeing the 2015 general election, Sir Christopher said: "We are running out of time. This will require legislation. If they really want to do it, they could still do it. If it were delayed a few years, it would be a shame, but still a prize to get a sensible, sustainable system."

According to Sir Christopher, the £50,000 ceiling favoured by the Tories would convince no one that "big money" has been taken out of politics. He admitted it is "difficult" to argue for more state funding for parties in an age of austerity but detects a willingness among the parties to re-allocate some of the £70m a year they already receive to fill the hole left by a donations cap.

Sir Christopher insisted his committee's call for parties to receive £23m a year was a "relatively small" amount – 50p per elector, less than the price of a first-class stamp. "This is part of the cost of supporting democracy," he said. He pointed out that £90m was spent on the 2010 general election, £80m on the referendum on the voting system and £75m on last Thursday's Police and Crime Commissioner elections.

His five-year post was due to end next month but has been extended to March while the future of the anti-sleaze watchdog is reviewed for the Government by Peter Riddell, director of the Institute for Government think-tank. Francis Maude, the Cabinet Office minister, wants to abolish as many public bodies as possible to save money and the options include merging the committee with other bodies or regulators, and putting it on standby so it could be activated for one-off inquiries.

Sir Christopher is arguing strongly for his committee to keep its current permanent status, so it can "keep an eye" on standards in public life, launch its own inquiries and campaign for changes it recommends. "Our independence is absolutely crucial," he said.

As his term draws to a close, he insisted there is a long list in his successor's in-tray. He will recommend the committee launches an inquiry into lobbying firms. The Government's plan for a statutory register satisfied neither the industry nor pressure groups demanding change and appears to be on the back burner.

"There are some really difficult issues. You cannot inhibit 'virtuous lobbying'. It is part of the democratic process for charities to campaign and make points to government … There are other forms of lobbying people would be less inclined to accept such as preferential access – either because they are donors or it takes place in secret or we don't know who is being lobbied by whom. There is an issue about people having access of a kind other people don't enjoy. That is not fair. We need to find a way to address these issues without inhibiting 'virtuous lobbying'."

Sir Christopher will also urge his successor to investigate whether ethical standards are being undermined by more publicly funded services being delivered by the private sector, voluntary groups and co-operatives – such as private firms running schemes for the jobless and police functions and GP commissioning groups. He senses a big change is under way with huge implications and is anxious to ensure the new deliverers are properly accountable and have proper guidance and training.

Although the 2009 MPs' expenses scandal was "a very damaging episode", he believes standards in public life have improved during his time at the watchdog and are "quite high" by international standards. He conceded the public might not share that view. "It's not perfect, it can be improved. Do I think we can relax and sit back? Clearly not."

After a long civil service career and serving on a range of public bodies, Sir Christopher, 66, who also chairs the King's Fund health think-tank, is not sure what he will do next. "I am open to offers", he quipped. "A lot of things I have done have happened to me unexpectedly. I have been very fortunate."

Lobbying and sleaze: a recent history

2012 Peter Cruddas resigns as Tory co-treasurer after apparently offering meetings with David Cameron for donations of up to £250,000.

2011 The Independent reveals that lobbying firm Bell Pottinger has boasted to potential clients about its access to Mr Cameron's close allies.

2011 Liam Fox resigned as Defence Secretary after it emerged his close friend and self-styled adviser Adam Werritty accompanied Fox on foreign trips and attended meetings.

2009 MPs' expenses scandal breaks.

2006 Labour Party donors were among a list of nominations blocked by the House of Lords Appointments Commission, after questions over cash being offered for honours.